Asia Foreign Policy Update Forum Address - John McCarthy

H. E. Mr. John McCarthy, Australian Ambassador to Japan

The only other point I’d make is Russia and the Japanese have shown some interest in improving their relationship over the past 18 months or so. This is partly because of the possibilities of getting oil supplies from Central Siberia to Japan. No decisions have yet been made on that by the Russians, but they are likely to be made shortly. But also I think it’s legitimate to see it in terms of balance of power politics, as relevant to the rise of China. Countries just - that’s the way they do things.

I think probably that’s all I want to say on Japan. I just want to make a couple of points about the relationship with Australia.

Japan does remain very important to us. I think people in this room wouldn’t disagree with that, because I don’t know that you’d be here if you did. But a lot of people have kind of got disillusioned. You know, what is this country doing? It’s not doing real well. Is it as important as it should be? Perhaps we should be going off to China. My response to this would be yes, you really should go to China, there’s a lot happening, but don’t ignore what is happening in Japan. It is still a country which is one and a half times the size in economic terms of the rest of East Asia put together. You would think it has sunk over the last 10 or 15 years. In fact it has grown. There have been four periods of recession but it has had occasional periods of respectable growth. And it is still a country which in ways is enormously innovative and where there is enormous talent and considerable capital. All the estimates suggest that demand for our resources will continue to increase in coming years, in the next five or six years into Japan and there are numerous opportunities for Australians to do business in Japan. But it is very, very important that the Australian business community maintain that in their minds.

And I would also say that there is something of a tendency, I think, in Japan not fully to appreciate what has happened in this country over the last 15 years or so in terms of our own economic restructuring, the sort of economy we now have, and perhaps a little bit more attention could be paid on the part of Japanese business to aspirations in Australia to do more with Japan. There are some people in Japanese business, some people in Japanese government who fully appreciate it, but I certainly would like to endeavour in the time left to me in Japan to try and do more because it could be a bit of a deficiency and it’s something I think both Australia and Japan need to work to make up - because opportunities are being missed and there is a little bit of a tendency in each country not fully to see what the other can do for it.

And I know that on your tables - I’m doing a commercial here for Hugh Morgan - there is an advertisement for the meeting in Kyoto in October of the Australian/Japan Business Consultative Council. It needs support. It does some very, very valuable work for Australian business. The more Australian business can do to contribute to it the better.

Finally, we’re working on a trade and economic agreement with Japan. An FTA is not yet in sight. It won’t be obtained with Japan any time soon. The reasons why you can’t have an FTA - free trade agreement - are simply that agriculture is too much of an issue between our two countries, at least at this time. But there is a fair amount else that can be done to facilitate trade and investment between Australia and Japan and at least we can keep in place a process of looking at what might be done down the line on trade liberalisation - potentially at the end of the day an FTA. Not any time soon, but potentially at the end of the day. But this is going to be hard, and in the next two or three months a lot of work has to be done with the government of Japan on this. Again I thank the Japanese business representatives here.

Okay, Philip, I’ve done my bit. Thank you very much.

CHAIR: Ladies and gentlemen, it is my privilege and John has very kindly agreed to take some questions. John and I have both worked in the media in Canberra and, as we used to say, there were no embarrassing questions, only embarrassing answers. Please feel free to ask John whatever questions you might like to ask and then if you wouldn't mind and then if you wouldn't mind identifying yourself or your organisation as you do that. We have a question?

QUESTION: John, you went a certain distance with North Korea and the problems that poses, especially with the deconstruction of Kedo and the agreed framework. Several Japanese politicians, including Prime Ministers Nakasone, Kishi, and his brother Sako Sato have said at various times that Japan reserves the right to go nuclear. One of the trip wires would be if North Korea developed nuclear weapons. Can you give us any steer on that subject? I know it's very sensitive, but is there anything you can tell us, reassuring or otherwise?

AMBASSADOR: Sure, well, first off it is worth perhaps mentioning that the Japanese have the capacity to put a nuclear weapon together very very quickly. They have got extremely capable technicians, top class scientists -- that's not a problem; that's not the issue at all. The issue is whether they intend to as a matter of policy.

The answer is: I don't think so. But, like anything, in the final analysis way down the track you can't rule it out. Japanese Ministers have alluded to the possibility in hypothetical terms. But, I think there are several things that have to happen first. I think a couple are already happening.

As I said, policy makers in Japan are acutely concerned about this North Korean issue. You can understand why. If the North Koreans were to use a nuclear weapon it wouldn't be on China; it wouldn't be on Russia. It is most unlikely it would be on their compatriots in South Korea. The most obvious target is Japan where, of course, there are American military bases as well, which make it perhaps more inviting as a target.

So, you can understand this concern. What is happening right now is there is a greater interest in Japan on missile defence than there was even four or five months ago. Now, Japan was already going in the direction of missile defence -- the speed with which it is going in the direction of missile defence is much much greater. Missile defence is a system which would give them basically an anti-ballistic capacity to hit whatever is incoming from the Korean Peninsula - a significant anti-ballistic missile defence capability.

I think the second thing that is being talked about is Japan getting offensive capability which they currently don't have under their Constitution. That may well develop. I simply don't know. I think you are looking a very long way down the track before they decide to develop a nuclear capability and when I raised this question with a group of Japanese experts on these issues the general answer that came back was that it was really very unlikely for a whole host of political reasons. Bear in mind this is the country that was bombed -- Hiroshima and Nagasaki were bombed. It is very unlikely for political reasons unless the whole international structure to maintain the cause of non-proliferation, the NPT -- Non-Proliferation Treaty -- were to break down in which case you could see a totally different international situation, part of which might involve Japan going nuclear.

But, there are many stages to go through before we get to that and it is certainly not an item on the agenda right now.

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